The new natural gas royalties are as follows:
Fields above 5,000m:
- Gradual reduction from 70% to 29% from 1 April 2016 for natural gas to be used in households and for heat generation, as follows:
a) Until 31 March 2016 – no reduction (the 70% rate applies);
b) During 1 April 2016 – 31 December 2016 – the rate to be reduced to 50%; and
c) From 1 January 2017 – the rate to be reduced to 29%.
- Immediate reduction from 55% to 29% for natural gas for all other uses.
Fields below 5,000m:
- No reduction in royalty rates on natural gas to be used in households and for heat generation; and
- Immediate reduction from 28% to 14% for natural gas for all other uses.
Royalties on natural gas produced under joint venture agreements remain as before (the 70% rate applies).
Additionally, the royalty on natural gas transit is to be abolished.
The new royalty rates are part of a comprehensive package of tax changes – the final text of this much-debated draft law as passed yesterday is not yet available and changes cannot be entirely excluded. The law is expected to become effective very soon, once signed by the President and published.